Charities and nonprofits are an important part of the economy. The?Chief Economist for Canada’s Charitable and Nonprofit Sector is responsible for measuring the impact of the sector and bringing its economic issues forward to public policy decision?makers.
The sector is important in terms of its contribution to economic activity and jobs. In Canada, more than 170,000 organizations work in areas ranging from healthcare to sports, the arts, social services, education, international development and the environment. The charitable and nonprofit sector represents 8.1% of Canada’s GDP and 10.5% of the labour force.
Unfair or Unwanted? Competition Between Charities and For-Profit Businesses in Canada?
As Canadian charities face a long-term crisis of financial sustainability, they are?looking at ways to increase earned income. At the same time, for-profit businesses have become more active in areas once thought to be the unique domain of charities.?The prospect of more competition with the private sector brings increased attention from policy makers who have expressed concerns about “unfair competition between for-profit businesses and tax supported charities.”?
This?discussion paper, by Chief Economist Brian Emmett, argues that for-profit businesses and charities co-exist in many markets, both benefiting from government support, and that tax policy has little, if any, effect on market shares and earnings of for-profit businesses.
- The cost of tax expenditures supporting the charitable and nonprofit sector amounts to about a third of the amount directed to for-profit businesses.
- What would the impact be, on the market share of charities, of eliminating tax concessions for the charitable sector?
- Government is fundamentally changing the rules of the marketplace for charities and for-profit firms, often inadvertently tending to emphasize many of the qualities for-profit business bring to the table.
- Charities receive tax concessions, but the ability to access capital gives for-profit businesses a built-in advantage charities lack.
- Both charities and businesses are growing in important markets but businesses have an advantage that allows them to adapt to change more quickly.
In February 2013, Brian Emmett joined Imagine Canada in the unique role of the Chief Economist for Canada’s Charitable and Nonprofit Sector. Read more.
The office of the Chief Economist for Canada’s Charitable and Nonprofit Sector is made possible through funding received by?The Counselling Foundation of Canada, the Muttart Foundation, and an anonymous donor.